"To get rich is glorious." -- Deng Xiaoping. This is perhaps the smartest thing ever uttered by a member of the Communist Party.

Tuesday, November 16, 2010

Quantitative easing and the Fed

This. Is. Hilarious.

On a related note I'd like to highlight a new paper from the Cato Institute examining the Fed's record. From the introduction:

The broad conclusions we reach based upon that research are that (1) the full Fed period has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed‘s establishment; (2) while the Fed‘s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its (undoubtedly flawed) predecessor; and (3) alternative arrangements exist that might do better than the presently constituted Fed has done.

These findings do not prove that any particular alternative to the Fed would in fact have delivered superior outcomes: to reach such a conclusion would require a counterfactual exercise too ambitious to fall within the scope of what is intended as a preliminary survey. The findings do, however, suggest that the need for a systematic exploration of alternatives to the established monetary system, involving the necessary counterfactual exercises, is no less pressing today than it was a century ago.

I haven't read the whole thing, but it looks quite interesting.

Related: Here is an old blog post of mine expressing skepticism in the Fed, which in many ways is a vast exercise in economic central planning.

Update: Marginal Revolution has a blog post on the Cato paper. Make sure to check out the comments.